NASDAQ Composite falls over 4%, S&P 500 drops 2.6% amid tech selloff as AI skepticism grows

The Nasdaq Composite fell 4.18% and the S&P 500 dropped 2.64% on June 5, 2025, as a tech selloff driven by growing skepticism about artificial intelligence investments rattled markets. Semiconductor and AI stocks led the decline, with investors questioning whether massive capital expenditures will yield returns. The selloff continued on June 23, with the Nasdaq falling over 2% and the S&P 500 losing about 1.4%.

NASDAQ Composite falls over 4%, S&P 500 drops 2.6% amid tech selloff as AI skepticism grows Semiconductor and AI stocks bore the brunt of selling pressure as investors question whether massive capital expenditures will ever pay off The Nasdaq Composite plunged 4.18% on June 5, closing at 25,709.43 in its worst single-day performance since April 2025. The S&P 500 wasn’t spared either, shedding 2.64% to finish at 7,383.74. The catalyst: a growing chorus of investors who are starting to wonder whether the AI trade has been writing checks the technology can’t cash. On June 23, the bleeding continued with the Nasdaq falling over 2% and the S&P 500 losing approximately 1.4%, as chip stocks in particular remained under sustained selling pressure. The AI confidence crack Semiconductor and AI-adjacent stocks bore the worst of the damage, with investors increasingly skeptical about sustained demand and long-term profitability. Crypto feels the tremor, but stays on its feet Bitcoin dropped only about 1.6% during the most volatile trading sessions, a notably muted response compared to the carnage in equities. Bitcoin’s price hovered near the $60,000 level, pressured but not panicking. Crypto-linked equities told a different story entirely. Companies like Galaxy Digital, Riot Platforms, and Hut 8 saw declines of up to 10%, reflecting the same risk-off sentiment that hammered traditional tech stocks. The Fed factor and what it means for risk assets Investor expectations have pivoted toward a more hawkish Fed, with increased odds of interest rate hikes creating a hostile environment for anything classified as a risk asset. Rising rates act like gravity on high-growth valuations. When the risk-free rate goes up, the present value of future earnings goes down. That hits AI and tech stocks especially hard because so much of their valuation is built on projected future profits rather than current cash flows. For crypto, the hawkish tilt introduces a dual headwind. Higher rates reduce the attractiveness of non-yielding assets like Bitcoin relative to bonds and money market funds. They also tighten financial conditions broadly, which tends to reduce the speculative appetite that fuels crypto rallies. Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy https://cryptobriefing.com/editorial-policy/ .